FCC calls for free hand in spectrum auctions

Federal Communications Commission Chairman Julius Genachowski turned his annual lovefest wth CEA president Gary Shapiro at the Consumer Electronics Show (CES) into a bully pulpit Wednesday, prodding an ambivalent U.S. Congress to pass a law allowing incentive auctions of broadband spectrum, and to act fast, without "tying the hands" of the FCC.

In a 30-minute address to a packed ballroom at CES, which preceded one of his amiable "one-on-ones" with Shapiro, Genachowski urged Congress to forestall an impending "spectrum crunch" -- caused by "an ocean of demand" for broadband use by consumers. He asked legislators to not hamstring a new law that would authorize the FCC to structure and manage the sale and redistribution of under-used and unused spectrum.

The new authorization passed in the House in December, but faces opposition in the Senate, and President Barack Obama has threatened to veto it in its present form. Two proposed restrictions, inserted into the legislation by House Republicans, threaten to delay enactment, perhaps indefinitely.

These restrictions would limit the FCC's ability to set the terms for who can bid in the auctions, and it would end the FCC's practice of giving some spectrum away, at no cost, to previously unlicensed holders.

Citing the potential of earning "$25 billion in cash for the Treasury" through these auctions, the FCC Chairman said, "We need to get it done now and we need to get it done right," without the restrictions in the House bill. Genachowski noted that four Senators had come outr in favor of preserving the FCC's current auction authority. He quoted a statement by Senators John Kerry (D-Mass.), Olympia Snowe (R-Me.), Mark Warner (D-Va.) and Jerry Moran (R-Kan.), which said, in part, "Spectrum is a vital public asset...We must suppress our desire to be overly prescriptive."

Genachowski noted that, when the FCC auctioned spectrum in 1994, it was the first such regulatory action in history. But, he said, it set a world standard for such auctions in other countries and triggered U.S. leadership in mobile and broadband technology. He said, "The opportunities in the broadband commuity are huge... There are few better opportunities for expanding the economy than broadband."

But he added that placing restrictions on how to conduct the auctions could result in unintended consequences, including American slippage in competitiveness to countries that are moving aggressively on the broadband front. "The cost of tying our hands could be devastating in a fast-moving global economy."

As an example of the task the FCC faces, Genachowski noted that New York City alone now has 28 broadcast stations licensed to use spectrum. He cited broad agreement that New York doesn't need or fully use all that spectrum. But the FCC has to determine how much should be left in place and how much can be re-distributed by auction, with a minimum of delay and controversy.

On the issue of allocating unlicensed spectrum, Genachowski admitted that the up-front revenue from such giveaways is zero. But their impact on the economy in innovation, investment, new businesses and job creation is more than an equitable payoff, he argued. Among the products and systems that have resulted from the FCC's allocation of spectrum to unlicensed holders are garage-door openers and baby monitors, cordless phones, Bluetooth and WiFi.

If spectrum were leased rather than sold by the FCC then economic pressures could drive shifts in utilization. When bandwidth was allocated to an unnecessary function, it could be repurposed. Central control by the FCC would be desirable - otherwise individual companies reselling their spectrum for other purposes could cause interference by conflicting applications.

I see this as a case of greed, all around.
From the corporate standpoint, why does NYC *not* use all of the TV spectrum efficently? Simple. Because the TV content owners prefer to tie their content to media that charge subscribers by the month, instead of using ad revenues alone. The so-called "dual revenue streams," ads plus subscriptions.
And why is the FCC so bent on grabbing that TV spectrum and selling it to similar walled gardens, such as broadband providers? Simple. Because they stand to rake in the proceeds from the auctions, which will of course ultimately be paid for by the broadband subscribers - you and me.
I have always found it distasteful to see this FCC so bent on grabbing TV spectrum to hand it over to broadband providers, even though the mere addition of 100 MHz of spectrum is not where the big payoff is, for broadband providers. Not when you look at the channel widths being considered for 4G. And worse, the low TV frequencies are less than ideal for cellular systems to boot!